PARIS, Aug 29 (Reuters) - Michelin <MICP.PA> of France, one of the largest tyre makers in the world vying for leadership with Bridgestone <5108.T>, scrapped plans for a second plant in Mexico on Friday due to slow demand in north America.
The family-controlled group based in Clermont-Ferrand, central France, had already embarked upon a cost savings programme to offset slowing economies, lower dollar prices and a rise in the cost of rubber and steel.
The group's managing partner Michel Rollin, a founding family member who took over from Eduard Michelin after his death in a boating accident in May 2006, was due to unveil details of this Horizon 2010 plan at the Paris motorshow in early October.
This aims to slash 500/550 million euros in costs by 2010 compared to 2010.
Michelin had said in August 2007 it would build a plant in the state of Guanajuato. The plant was intended to produce tyres for the North American market.
Michelin said productivity gains and additional investments in existing North American production facilities would enable to respond to continued strong demand for high-performance and large-diameter tyres.
All of Michelin's other investment projects in North America will continue, it said.
According to data on the Michelin website, total sales of passenger tyres to carmakers were down 14.9 percent in June compared to a year ago in North America while the market for replacement tyres there was up 1.1 percent.
Year to date, the passenger car tyres were down 12.2 percent and replacement tyres 1.7 percent.
in North America, Michelin has a big site in South Carolina and its BF Goodtich Tire Manufacturing unit closed its Kitchener site in Onario in 2006.
DECLINE IN PROFIT
On July 30, Michelin reported a bigger-than-expected decline in first-half operating income and reduced its 2008 profit target on an expected greater impact from raw material prices, but kept its 2010 objectives.
Michelin said it has a market share of 17.2 percent, equal to Bridgestone and ahead of Goodyear's <GT.N> 16.0 percent.
It did not give the market share of Continental <CONG.DE>, which is also active in other car parts and which has acceoted a a takeover approach by private ball-bearings group Schaeffler.
Michelin is also suffering from exchange rates which depressed first half group sales by 5.9 percent in the first half due to a low dollar, pound sterling and Mexican peso versus the euro.
Michelin shares have lost 43.3 percent this year and the company has a market capitalisation of $9.3 billion versus $13.3 billion for Bridgestone.
The top Japanese tyre maker last month posted a worse-than-expected 18 percent drop in first-half operating profit citing expensive raw materials and a stronger yen, and slashed forecasts as vehicle sales slump in Western markets.
Tyre makers face further production cutbacks at North American automakers due to a slump in demand for large vehicles amid high fuel prices.
(Reporting by Marcel Michelson; Editing by Louise Heavens) Keywords: MICHELIN/ tf.TFN-Europe_newsdesk@thomson.com ra COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The family-controlled group based in Clermont-Ferrand, central France, had already embarked upon a cost savings programme to offset slowing economies, lower dollar prices and a rise in the cost of rubber and steel.
The group's managing partner Michel Rollin, a founding family member who took over from Eduard Michelin after his death in a boating accident in May 2006, was due to unveil details of this Horizon 2010 plan at the Paris motorshow in early October.
This aims to slash 500/550 million euros in costs by 2010 compared to 2010.
Michelin had said in August 2007 it would build a plant in the state of Guanajuato. The plant was intended to produce tyres for the North American market.
Michelin said productivity gains and additional investments in existing North American production facilities would enable to respond to continued strong demand for high-performance and large-diameter tyres.
All of Michelin's other investment projects in North America will continue, it said.
According to data on the Michelin website, total sales of passenger tyres to carmakers were down 14.9 percent in June compared to a year ago in North America while the market for replacement tyres there was up 1.1 percent.
Year to date, the passenger car tyres were down 12.2 percent and replacement tyres 1.7 percent.
in North America, Michelin has a big site in South Carolina and its BF Goodtich Tire Manufacturing unit closed its Kitchener site in Onario in 2006.
DECLINE IN PROFIT
On July 30, Michelin reported a bigger-than-expected decline in first-half operating income and reduced its 2008 profit target on an expected greater impact from raw material prices, but kept its 2010 objectives.
Michelin said it has a market share of 17.2 percent, equal to Bridgestone and ahead of Goodyear's <GT.N> 16.0 percent.
It did not give the market share of Continental <CONG.DE>, which is also active in other car parts and which has acceoted a a takeover approach by private ball-bearings group Schaeffler.
Michelin is also suffering from exchange rates which depressed first half group sales by 5.9 percent in the first half due to a low dollar, pound sterling and Mexican peso versus the euro.
Michelin shares have lost 43.3 percent this year and the company has a market capitalisation of $9.3 billion versus $13.3 billion for Bridgestone.
The top Japanese tyre maker last month posted a worse-than-expected 18 percent drop in first-half operating profit citing expensive raw materials and a stronger yen, and slashed forecasts as vehicle sales slump in Western markets.
Tyre makers face further production cutbacks at North American automakers due to a slump in demand for large vehicles amid high fuel prices.
(Reporting by Marcel Michelson; Editing by Louise Heavens) Keywords: MICHELIN/ tf.TFN-Europe_newsdesk@thomson.com ra COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.